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Jul. 20, 2006
Copyright © Las Vegas Review-Journal


Offshore books duck and cover

Bodog cancels conference in wake of crackdown

By MATT YOUMANS
REVIEW-JOURNAL

On the outside, it appears Magic Johnson and an offshore sports book make an odd couple.

Johnson, vice president and minority owner of the Los Angeles Lakers, was scheduled as the featured speaker at the Bodog marketing conference next week at Wynn Las Vegas.

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Revealing the secrets to picking point-spread winners in NBA games was not the topic of Johnson's speech, though.

"It's got nothing to do with gambling," said Calvin Ayre, founder and chief executive officer of Bodog.com, an online casino based in Costa Rica.

But Johnson will not be appearing Monday as planned. Ayre announced Wednesday the conference is postponed, citing a "high level of concern over the uncertainty surrounding the U.S. government's recent actions against one of the companies in our industry."

The session with Johnson was titled "Branding: When Everybody Knows Your Name." The focus of the conference, which Ayre said will be rescheduled at an international location, is on how to market Web sites and form successful business strategies.

Ayre's name has become well known in recent years, and Forbes magazine put him on the cover of its "Billionaires" issue in March. But after a significant event that shocked the offshore industry this week, Ayre said several people hoping to attend his conference had to reconsider visiting Las Vegas.

David Carruthers, CEO of the offshore book BetOnSports, was en route to Costa Rica from London on Monday when detained by the FBI while changing planes in Dallas. Carruthers was arrested because BetOnSports accepts wagers from the United States.

Federal officials unsealed a 22-count indictment charging 11 people and four companies with conspiracy, racketeering and wire fraud in taking sports bets from U.S. residents. Authorities said BetOnSports falsely claimed that Internet and phone wagering on sports was legal and licensed. It was one of 19 offshore books to go offline Wednesday pending the outcome of hearings.

"There are so many legal issues involved here that one hardly knows where to begin, and the most important of them is that of jurisdiction -- what jurisdiction does the United States government have over an English firm operating out of Costa Rica?" said handicapper Kelso Sturgeon (kelsosportshandicapping.com).

"My money says, none, and if I am right this case will be tossed into the outhouse as soon as this issue is addressed."

The ongoing legal struggle between the U.S. government and offshore casinos promises to get more interesting, and Ayre said he thinks he knows one eventual outcome.

"It's just a matter of time before online gaming is legalized in the U.S.," he said. "It may still be several years away."

Ayre pointed out the American Gaming Association seems to have "flipped its stance" on some Internet gaming issues.

A recent AGA report stated: "While the U.S. Department of Justice and several individual state governments have long held that Internet gambling is illegal in the United States, the online gambling industry currently is thriving, due in large part to participation from U.S. bettors. U.S. residents went online to bet more than $4 billion at offshore, non-U.S. entities in 2005 ... and the rate of Internet gambling among U.S. residents is growing at more than 20 percent a year. Additionally, a number of foreign nations, including Great Britain, are in the process of legalizing, licensing, regulating and taxing Internet gambling operators."

The report suggested a congressional study on the impact of offshore gambling to determine, among other things, "whether Internet gambling can be effectively legalized and regulated in the United States."

If Las Vegas casinos, for example, are allowed to book sports online, Ayre said, there would be a "massive consolidation" of offshore books.

Sports wagering accounts for only about 20 percent of Bodog's handle, Ayre said, with casino games and poker each accounting for about 40 percent.

"The rest of our business is growing faster than sports," Ayre said. "There is no question that international gaming is growing the market for land-based casinos."

Johnson is among many former professional athletes to associate in some way with offshore gambling operations, even as leagues such as the NBA and NFL -- not to mention the NCAA -- attempt to lead anti-sports wagering campaigns.

"Somebody has got to step up and admit gambling is what drives the popularity of sports and it's directly linked," Ayre said.

The U.S. government's actions crashed the Bodog conference, but not the party.

The scheduled party to wrap up the Bodog event will go on as planned at Tao at the Venetian at 9 p.m. Tuesday. Ayre is not expected to attend.


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